5 Paige Ch. 13 | New York Court of Chancery | 1834
The vice chancellor was right in refusing to go into an inquiry whether the assignment of 1817 was not fraudulent as respected the creditors of E. M. Blunt. It was valid as between the parties thereto; and as the complainants were not then creditors, it could not have been made to defraud them. Those who were then creditors, had a right to elect to take the provision made for them by the assignment, even conceding it to have been fraudulent. And they have a prior equity to be paid out of the property then assigned, or the proceeds thereof, if it can now be traced and identified, although it may have passed into the hands of the new assignees, for the benefit of other creditors. And if there are no creditors having such prior claims, then the rights of the complainants are the same, whether the first assignment was or was not fraudulent; as their judgments are against both the assignor and the assignee in that assignment.
Since the. decree of the vice chancellor was made in this cause, the case of Grover v. Wakeman, (11 Wendell, 187,) has been passed upon by the court of dernier resort. It cannot therefore be any longer doubted that the decision of the vice chancellor was correct, in declaring the last assignment fraudulent and void as against the creditors of the assignors; as those creditors could never get any part of the assigned property without submitting to the terms imposed, of giving up all farther claims against their debtors. But the vice chancellor has done what this court did in the case of Wakeman v. Grover—-refused to charge the assignees with that part of the proceeds of the assigned property which had been paid over to the preferred creditors, or distributed among them, previous .to the filing of the complainants’ bill. And, in reference to this question, a distinction is now attempted to be taken between an assignment fraudulent in law merely, and an assignment which is fraudulent in fact. The distinction between what is now called fraud in law, and that which is denominated by the counsel fraud in fact, appears to be that in the first case it is apparent from the terms of the assignment itself that the parties intended to do an act the legal effect of which would be to defraud the creditors, and that in the oth
If the assigned property had been in the hands of J. Blunt undisposed of at the time the complainants’ executions issued, it might be necessary to.inquire whether he could be considered a bona fide purchaser, so as to defeat the lien of those executions; inasmuch as he claimed through or under an assignment, which was fraudulent on its face. I am inclined to think the property would in that case have been liable to the lien of the executions, and might have been sold under the same. It does not appear, however, that any part of the assigned property, which was the proper subject of a seisure and sale on execution, remained undisposed of at that time. And even if that fact did appear, it still would be doubtful whether the lien of the executions was not lost by returning the same unsatisfied, without any attempt to make a levy. (See Opinion of Mr. Justice Nelson, 9 Wendell’s Rep. 561.) The price paid by Joseph Blunt, for the property on hand at the time he purchased, was the full value thereof. So much of the purchase money therefore as had been paid to the assignees, or applied to the payment of bona fide debts before the filing of the complainants’ bill, ought not, in justice and equity, to be charged upon him the second time; and so much thereof as remained then undistributed is already provided for in the account which is directed to be taken. If any of his notes were unpaid at the time of filing of the complain
As there was no fraud in the sale of the property to Joseph Blunt, he having purchased for the full value, and the proceeds being all applied to pay bona fide creditors, I cannot see any thing objectionable in the arrangement he subsequently made with his father and brothers to endeavor to turn the property into cash, and at the same time to furnish his father with the means of livelihood. Even if he had given the whole of this property to his father, or had secured the use of the whole to him in such a manner as to protect it against the claims of creditors, it would be far from furnishing any evidence of fraud. Whatever frauds upon his creditors the father may have been guilty of, it cannot be a fraud in the son to pay the full value of the property out of his own funds for their benefit, and then to insure his parent a maintenance out of the property thus acquired.
I think the vice chancellor has in this decretal order done all that was necessary or proper to be done, in this stage of the cause, to protect the rights of the complainant against the fraudulent assignment of January, 1823 ; and that there is nothing in the decree which requires to be altered or modified. The decree or order appealed from must therefore be affirmed, with costs.